Tim Sweeney and Ray Davis on the keys to making Unreal Engine a successful subscription service

Unreal Engine maker Epic Games isn't the first company to try selling its professional tools as a subscription service instead of a one-time purchase. As a result, it has one advantage that its predecessors in the field didn't really have; real-world case studies to learn from. Speaking with GamesIndustry International at the Game Developers Conference, Epic Games CEO Tim Sweeney and Unreal Engine general manager Ray Davis, said they'd taken some lessons from previous offerings from the likes of Adobe and Unity.

"When you do that (sub model), people have a high expectation of you keeping your systems up and running, viable and delivering good customer service," Sweeney said. "That's been the big lesson of all the successful and unsuccessful launches of games or any sort of product that's offered in this way. We've been very respectful of what the best companies in the industry have done."

Sweeney pointed to the way Amazon handles its customer service.

"The subscription model made the most sense because the engine itself is a living product. We don't just ship a version and walk away, right?"

Ray Davis

"They do a great job there of taking care of their customers, and we've got to be that company. Otherwise, we're Comcast or Time-Warner."

As for why Epic decided to switch to a $19 monthly fee with 5 percent of royalties, Davis just said it better matches the way Epic handles the business.

"The subscription model made the most sense because the engine itself is a living product," Davis said. "We don't just ship a version and walk away, right? Even as we speak, there are programmers back in North Carolina and Seattle working away on it, improving and working on new features."

Sweeney added, "This is something many of us at Epic have wanted to do for more than a decade. We've been really inspired by John Carmack and how he opened up Doom and then the Quake source to the community, eventually. Our dream was to have live access to our actual code, the same way we give it to our high-end licensees who are potentially paying millions of dollars. We've simplified the engine and the codebase to the point we can finally do that."

The move has undeniably made Unreal Engine 4 a more viable choice for small development teams than its predecessors, but Davis dismissed the idea that it was prompted by a shrinking of the AAA customer base on which Epic built its earlier Unreal Engine business.

"The industry seems to be rapidly increasing pace in evolution, especially with VR this year," Davis acknowledged. "It seems like from my perspective there are more developers than ever. There are still plenty of large teams doing great now that the next-gen consoles are here, finally. And the number of platforms out there too that developers are able to get their games on is ever-growing, which is an interesting logistical challenge for us, how we support all these things."

And even though the industry has little transparency into digital distribution revenues, Sweeney seemed unconcerned about the potential for developers to short Epic on those royalty payments.

"[W]e've...designed it with a royalty model on the back end, so if developers succeed with their games, then Epic succeeds with our engine. It seems like the ultimate fair and honest model."

Tim Sweeney

"These are professional developers who are [building] businesses for themselves and shipping products," Sweeney said. "Everybody operating on that level is going to be taking their status as a company pretty seriously. I don't anticipate any sort of large-scale cheating at that level. It's a case of software. You're going to find it on BitTorrent, but people who pirate it aren't going to go off and develop a game with a budget, put a lot of resources into it and ship it on a pirate version. There's a lot of common sense out there, and I think people will do the right thing when they're going through the release cycle."

Sweeney also trusts that the subscription model won't limit the accessibility of games years and decades down the road.

"The nice thing in that area is with this royalty model, eventually the game is given away because the developer decides the sales have trailed off and now they're just going to open it up to the world to have for fun, as id Software and other companies have done in the past," Sweeney said. "And 5 percent of zero is zero. So there's no accounting required or royalties required. The same thing applies to hobby projects and charitable efforts, things of that sort."

Davis added that having the source code of the engine widely available should make it easier for communities to keep their games alive, or to create versions compatible with new operating systems.

And while the Unreal Engine will continue to evolve, Sweeney is satisfied that this new business model will endure for the foreseeable future.

"This works," Sweeney said. "We've put a lot of thought into how to make this very accessible, so if you can afford to play an MMO, you can afford to subscribe to an engine and get the complete tools and source. That's a very low barrier to entry. But we've also designed it with a royalty model on the back end, so if developers succeed with their games, then Epic succeeds with our engine. It seems like the ultimate fair and honest model. I'm very happy where we ended up."

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This model clearly has benefits, but only if Epic succeeds in supporting their engine in such a way that updates won't break games in progress. With a lot of small updates that probably won't happen, but with big updates that risk is always there. Does anyone know if there are frameworks for the Unreal Engine which support automated testing?

sorry but this closed development process they follow is problematic to me. i have no idea what is coming when and what it will do to my project. and that is only a small part of the story. despite this very welcome but kind of desperate move, they still have not really changed as much as they probably think they have or would like to. I am very impressed by UE4 there is no doubt about it, but until it gives me the flexibility that Unity does i will stick to that. Even if it doesn't exactly offer yet the same visual quality. Unity offers a larger, friendlier community, tons of additional resources, tons of learning material, uses C#, offers very wide porting options out of the box and overall is more modern, and business friendly too with great community support.

I understand why the subscription - revenue sharing model is probably a great deal for indie developers. But since 5 percent of the revenues from a core - AAA game could potentially translate into far more than Epic ever charged to license the engine, I just don't see how the already risk adverse large developers and publishers will rationalize agreeing to the terms. It would only make sense if the engine was so advanced that it could reduce the estimated development costs by a (insert currency here) figure that's significantly higher than 5 percent of estimated revenues.

@David : I think it is a great model that doesn't cancel the previous model. It is still possible to negotiate a contract with Epic paying upfront to them before releasing your game. It is just one more option making the engine accessible to people who couldn't use it before.

Personally, I think it's a phenomenal deal. UE4 is an very polished piece of kit with an out-of-the-box feature list that handily beats Unity Pro, and with a fraction of the upfront cost. This is a huge draw to the hobbyist and small indie markets. The documentation, tutorials and sample content they've launched with is first rate. Blueprint looks like a hugely useful system.

Unity is firmly entrenched as the engine of choice where studio revenue is sufficiently large as to make a revenue share unattractive, and it's clear that currently UE4 is probably a bit more heavyweight, on mobile particularly. The UE4 development environment is also more heavyweight - you'll struggle to run it on anything less than a moderately decent gaming PC. And of course a lot of people are heavily invested in Unity at this point.

But I can see UE4 making huge inroads into the hobbyist end of the indie development community. That's very beneficial to Epic on a number of levels. It's a modest source of sub revenue. In addition, the next Minecraft could come from any one of these one-man-shows. Lastly, getting lots more hobbyists and amateur developers familiar with your tool chain over time will widen and deepen the pool of AAA developers sympathetic to choosing your engine, because a lot of AAA talent start their careers as hobbyist developers.

I think it's a smart, long term move from Epic. It might be largely revenue neutral or even a loss in the short term, but the benefits in the long term look worth it to me.

Another huge benefit for Epic I forgot to mention - by opening up the source code and accepting reviewed contributions via github, they benefit from the collective bug hunting power of the community - something that Unity could do with on occasion! Epic also get their pick of any stand out feature contributions they like the look of.